TaxTMI 
TaxTMI 
2019 (5) TMI 670
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.... (1) M/s. Som Distilleries & Breweries Limited (hereinafter referred as "Petitioner/SDBL/Operational Creditor) was set up in the year 1994 by SOM Distilleries Pvt. Ltd. & others and has expertise in brewing, fermentation, bottling, canning and blending of Beer and Indian Made Foreign Liquor (IMFL). SDBL has bagged a number of awards of high repute and honour and has emerged as one of the leading and reputed groups in the business world and has earned great goodwill and reputation internationally. (2) M/s. United Breweries Limited, (hereinafter referred as "UBL/Corporate Debtor") was incorporated on 13.05.1999 under the provisions of the Companies Act, 1956, CIN No. L36999KA1999PLC025195,with Nominal Shares Capital of Rs. 99898 Lakhs and Paid-Up Share Capital of Rs. 2644 Lakhs and is, inter alia, engaged in the business of manufacturing, processing, selling and marketing of beer. (3) In the year 2003, UBL approached SDBL and represented that UBL possesses special technical information and know-how relating to the brewing, selling and manufacture of beer as well as the necessary marketing and distribution expertise for sale of beer throughout India. UBL offe....
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....hat the expiration or termination of the Agreement will be without prejudice to the rights of the parties and such expiration/termination shall not relieve UBL from any obligations as per the Agreement. Further, Clause 9.4.2 of the Agreement stated that upon expiration of the Agreement, UBL shall forthwith lift any unsold stocks of UBL beer that SDBL may have in its possession on the ex-brewery price for such products as per the Terms of the Agreement. (8) In accordance with the stipulations given the said agreement, SDBL used to raise bills upon the officials of UBL for payment of UBL brand bottling twice a year and also a separate bill in case of short-lifting, every year. The aforesaid bills were duly acknowledged by the officials of UBL and payments were made against it till date of default. (9) As stated earlier, the last renewal of Agreement between the UBL and SDBL, in writing, is effective till 31.03.2014. The said renewal was done on the express instructions and request of UBL. In accordance with the terms of the Agreement and the regular business practice between SDBL and UBL, SDBL raised bills upon UBL for the years 2012-13 and 2013-14 amounting to Rs. ....
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....arn revenue and profits under the Agreement. SDBL relied upon the intentional inducements of the above named persons (on behalf of UBL) and continued to act upon the express instructions of UBL without renewal of the Agreement in writing. (15) However, it transpired later to SDBL that the intentional inducements by the officials of UBL were given with mala fide intentions and false promises were made to cause SDBL to believe that the outstanding payments will be made shortly by UBL but subsequently UBL refused to make any payments of its admitted liabilities and started to avoid the calls and reminders of SDBL.That the representatives of the SDBL kept on visiting the offices of UBL and contacting the above named directors/officials of UBL time and again but to no avail as the above named directors/officials of UBL have failed and neglected to make the payments of UBL's admitted liabilities till date. (16) Further, to the utter shock and dismay of SDBL, UBL and its officials instead of making payments towards the admitted debt in favour of SDBL, go actively involved in filing frivolous criminal complaints as well as civil litigations against SDBL and its offici....
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....te Debtor has filed Statement of Objection dated 20.02.2018, by inter alia contending as follows: (1) The instant case is filed by making a claim of Rs. 5,33,44,550/- towards the payment of short-lifting of the beer for the years 2012-13 and 2013-14. And it is not maintainable in law and on facts. The Petition is filed with the mala fide intention of abusing the process of thus Tribunal and harassing the Corporate Debtor. (2) They have denied that there is any amount due and payable to the Operational Creditor as claimed by it. And the same is also time barred debt even to make claim. (3) They have stated that its products marketed under the trademark "Kingfisher" have gained tremendous reputation both in the domestic as well as international market. The Corporate Debtor has been carrying on business on an extensive scale all over India. The products enjoy great reputation and goodwill all over India. The Corporate Debtor is the registered proprietor in India of Trademark "kingfisher", a series of marks having Kingfisher as the prefix and also the registered proprietors of Trademark consisting of "UB (Device of Flying Horse)". (4) It is stated th....
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.... limitation. Consequently, in the present case, as discussed there has been no default for initiation of insolvency proceedings." (7) It is alleged that after expiry of the arrangement between the parties, the Operational Creditor clandestinely continued to use the trademarks of the Corporate Debtor in order to pass off its goods as that of the Corporate Debtor and illegally enrich itself from such illegal acts. Upon being informed of the illegal activities of the Operational Creditor, the Corporate Debtor has filed a suit in O.S No.25327 of 2015 before the City Civil Court, Mayo Hall Unit, Bangalore, against the Operational Creditor seeking a decree for permanent injunction restraining the Operational Creditor from infringing the Corporate Debtor's trademarks and passing off the product of the Operational Creditor as that of the Corporate Debtor. The Civil Court by the order dated 04.03.2016 returned the plaint with a direction to the Corporate Debtor to present the same before the proper jurisdiction district Court of Madhya Pradesh. Against the said order, the Corporate Debtor filed Misc. First Appeal No. 1941 of 2016 before the Hon'ble High Court of Karnataka a....
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....uage of definition of 'dispute and 'existence of a dispute, as occurring in sections 5(6) and 8(2) of the I&B Code and has held that the dispute is inclusive and does not limit itself to 'suit or arbitration' alone and it includes all kinds of pre-existing 'disputes' in relation to the debt and default. It is also noted that such a 'dispute' should be pre-existing or pending prior to issue of the notice of demand by the Operational Creditor under section 8 of the I&B Code. Therefore, the Hon'ble Supreme Court held the definition of 'dispute' to be 'inclusive' and not an 'exhaustive' one. Further, while emphasising the importance of the term 'existence' occurring before the word 'dispute' under section 8(2)(a) and the term ' notice of a dispute' in section 9(5)(ii)(d) of the I&B Code, the Hon'ble Supreme Court laid down a checklist for the adjudicating authority to consider admission or rejection of application under Section 9 of the I&B Code for initiation of the IRP. The Apex Court stated that if anyone of the following conditions is lacking, the application would have to be rejected: ....
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.... as Corporate Debtor may reasonably request and all such statements shall be prepared in accordance with generally accepted accounting principles consistently applied from applicable period to the period and shall be certified by an officer of Corporate Creditor as being true and correct and as being prepared in accordance with generally accepted accounting principles consistently applied from applicable period to period. The petitioner failed to furnish statement of gross sales of beer during such particular year and other documents pertaining to accounting. In the absence of required documents, the Corporate cannot even make a claim with regard to short-lifting of the beer, as asserted in the letters of demand. (15) It is further contended that after expiry of the agreement dated 14.01.2003 between the parties by efflux of time on 31.03.2013, the Operational Creditor accepted termination of relationship and officially stopped manufacturing and bottling products using trademarks of the Corporate Debtor. As per law, the Operational Creditor, being a licenses under the Excise Act, is bound to file returns giving details of manufacturing of various products. A mere look at t....
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....at Para 5 was made in the context of production of beer till the period of March, 2013. Therefore, referring the averments in the written statement in the suit is not relevant in the instant Company Petition. It is denied that the letters dated 08.10.2012, 30.03.2013 and 12.03.2014 are fabricated as alleged. The Respondent was in correspondence with them with regard to the payment and renewal of agreement etc. The Judgment has relied upon by the Respondent passed by Principal Bench, NCLT, New Delhi in the case of Prowess International (P.) Ltd. v. Action Ispat & Power (P.) Ltd. as stated supra, has been challenged before the Hon'ble NCLAT and the same is pending. The Reply notice dated 22.06.2017 sent by the Corporate Debtor is totally untrue and it is given with an intention to avoid the liability to pay the unpaid operation debt. 7. It is further stated that the Operational Creditor has addressed letter dated 29.12.2012 to Mr. Harish Kumar (authorised personnel of Corporate Debtor deployed at the factory of the Operational Creditor), by demanding for short-lifting charges was made for the period from October, 2011 to March, 2012. Accordingly, the Corporate Debtor had made ....
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....tand-alone Ind-AS results for the quarter and year to date period ended December 31, 2018 showing profit for the period/year Rs. 10,917 lakhs and submit that Company is profitable running. It is also stated that the total number of employees as on 31.03.2018 (excluding temporary/contractual/casual basis) in the Company is 2837. The total number of employees hired on temporary/contractual/casual basis as on 31.03.2018 is 5555. Therefore, it is not the case of petitioner that the Respondent is insolvent to initiate CIRP as per provisions of Section of Code. And the Respondent is not liable to pay the alleged outstanding amount in question. Learned Counsel for Corporate Debtor has relied upon a following judgment in support of the case: * Mobilox Innovations (P.) Ltd. v. Kirusa Software Private Limited (2018) 1 SCC 353 * B.K. Educational Services (P.) Ltd. v. Parag Gupta and Associates 2018 SCC Online SC 1921. 9. The instant Company Petition is filed by M/s. Som Distilleries & Breweries Limited (Petitioner) u/s. 9 of the IBC, by inter alia seeking to initiate CIRP in respect of United Breweries Limited (Respondent). As per section 2 of the Code, the provisions ....
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....d the balance 45% shall be produced during the remaining months. Variation in volume by +/-5% is permitted. In case of requirement in excess of the above agreed quantities. UBL shall inform SDBL at least 30 days in advance to enable SDBL to plan its schedule of production." "6.2 in the event UBL is unable to lift its committed value (Subject to variation of +/-5%), SDBL shall pay to UBL a penalty of Rs. 30/- per case for short supply calculated every 6 months as per the agreed terms. Similarly, in the event SDBL is unable to manufacture and sell the minimum committed volumes of 10.00 lac cases per annum (subject to a variation of +/-5%), SDBL shall pay to UBL a penalty of Rs. 30/- per case for short supply calculated every 6 months as per the agreed terms." Clauses 7.1, 7.2, 7.3, 7.4 and 7.5 of the said Agreement shall be deleted and replaced by the following clauses: "7.1 Payments As consideration to SDBL for manufacture and sale of UBL beer, UBL shall pay SDBL as follows: (a) Brand Fee: SDBL agrees that in consideration of manufacture and supply of beer under Labels mentioned in Annexure-1 of the said Agreement having....
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....any kind arising out of consumption of UBL beer or otherwise which maybe attributable to bottling and packaging operations of UBL beer the liability extends for any compensation, cost or claim arising from any complaints from any consumer including any consumer litigation." 11. Subsequently, a Letter dated 08th October, 2012 addressed to Mr. Harish Kumar, M/s. Som Distilleries & Breweries Ltd, (United Breweries Limited) RojraChak, Distt, Raisen, by inter alia stating as follows: "This is for your information that followings are the details of short-lifting of beer in the 1st half of the financial year. Beer to be lifted as per contract (from April to September, 12) : 5,00,000 cases Actual Lifting (Production) : 2,21,850 Cases Short-lifted quantity : 2,78,150 cases Short lifting charges to be paid by UB as per contract for the 1st half (April to September, 12 @ of Rs. 30/- per case = 83,44,500/-You are requested to release Rs. 83,44,500/- towards short-lifting at the earliest." 12. Subsequently, another letter dated 30th March, 2013 has addressed to the Respondent by inter alia claiming the amount of Rs. 1,50,00,000/- for the period from ....
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....tion with the Respondent was on 01.01.2013. Moreover, the Respondent has promptly denied the claim of the petitioner vide their reply dated 22.06.2017 by denying the liability. And the claim itself is basing on the purported letters issued on 08.10.2012, 30.03.2013, 30.09.2013 and 31.03.2014 which are denied by the Respondent. Therefore, the claim itself is barred by laches and limitation apart veracity of claim itself. Moreover, the MoU dated 14.01.2013 in question, itself contained several terms and conditions to claim any bills as detailed supra. Therefore, disputed issues cannot be gone into the proceedings in summary proceedings like instant proceedings initiated under the Code. As stated supra, the suit filed by the Respondent is still pending before Civil Court. Though the Suit in question is filed with regard to violation of the trademark in question, after the termination of the Agreement, outcome of suit will have bearing on the instant claim as the MoU in question is an issue for filing the suit and the same MoU is basic document in the instant petition. Therefore, the instant Company Petition is not only barred by laches and limitations and then there is a substantial d....